Closings

Severe Weather

What an Internet sales tax will cost you

The Senate is taking up legislation that would allow the 45 states (and the District of Columbia) that charge sales tax to require online retailers to collect taxes on purchases made by their residents. If approved, the bill will move to the House.

So how would passage of the "Marketplace Fairness Act" affect your online shopping? A lot depends on where you live and what you're buying. From California to New York, here's a look at what you can expect and an explainer of the bill, according to CNN:

But in many states, you can still shop tax-free at Internet-only retailers likeAmazon.com and Overstock.com.

Currently, these online sellers are only required to collect tax in states where they have a physical presence, such as a store or warehouse. But under the proposed law, states would be able to require online sellers to collect sales tax if they have sales of at least$1 million in states where they don't have operations.

Most states require you to pay a so-called "use tax" when a sales tax wasn't collected at online checkout. But few people actually do so.

So how much more will you pay if Congress passes the tax? In some cases, nothing.

If you live in Arizona, California, Kansas, Kentucky, New York, North Dakota, Pennsylvania, Texas and Washington -- states where the Internet giant has warehouses -- you are already paying taxes on Amazon purchases.

If you're a resident of a state that doesn't charge anysales tax, like Montana or New Hampshire, then your online shopping bills would also stay the same.

But in most states, you will pay more.How much more depends on the rates set by state and local governments. For example, a $1,000 televisionsent to New Jersey will carry a $70 tax, while a resident of Maine would pay $50 in sales tax.

Smaller retailers on sites like Etsy and eBay likely won't meet the $1 million threshold for out-of-state sales, meaning those items will remain untaxed.

But will all products from larger online retailers be taxed? Again, it depends on where you live. In general, states tax the purchase of so-called "tangible goods," but there are often a laundry list of exceptions. For example, in New Jersey all clothing is tax-free.

What about digital music, streaming movies and e-books? Like other products, the Marketplace Fairness Act wouldn't create any new taxes on so-called "digital goods," but it would let states enforce the laws they have in place already. Florida, for example, taxes streaming video but not digital books.

To find out what items are taxed in your state and at what rate, contact your state's tax and revenue agency. A map with links to the 50 state tax websites can also be foundhere.

Comments

The views expressed are not those of this site, this station or its affiliated companies. By posting your comments you agree to accept our terms of use.